Cities like Detroit and Memphis are more appealing to Chinese looking for predictable, steady cash flow, according to Juwai. They're snapping up foreclosures and other heavily discounted properties, fixing them up and renting them to local residents. They hire local managers to take on the day-to-day maintenance and collect the rents.

In the case of Detroit, the buyers often don't even do repairs right away, according to Rachel Saltmarshall, president of the Detroit Association of Realtors. They're buying at tax sales and foreclosure auctions and holding the properties, sometimes keeping them vacant, hoping that the city's comeback is imminent.

Downtown Detroit is going through a renaissance, according to Kelly Sweeney a local real estate broker for Coldwell Banker Weir Manuel. "The Chinese are making bulk purchases of inexpensive properties, $25,000 or less, in the rings around downtown," he said. "They're banking on the downtown resurgence spiraling out into those rings."